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The common saying goes that New Year Resolutions are meant to be broken
- Stop smoking
- Increase Family Time
- No fighting with Spouse
- Start Exercising, etc. etc.
So, this year, we shall not talk about the same regular New Year Resolutions that you make every year and break them within months of the year start. Let's change the way we look at new years resolutions by talking about the financial aspects.
Who doesn’t like to be financially independent? With financial resolutions to achieve, one starts its journey towards financial planning.
One will certainly have thought of savings, or investing their excess money in various alternatives. Here are a few financial resolutions that one should have in their bucket list:
1. Proper Financial Planning:
One of the major lookouts of today’s generation is not knowing how to do Proper Financial Planning. The changing lifestyle and the rising cost have scooped up. It is advisable to have financial planning done at an early age so that the finances are managed efficiently. Financial planning has now become a necessity and a status symbol and hence everyone is moving towards opting it. Most people are of the thought that proper Financial Planning would ease a lot of their financial worries.
2. Individual Health Plan:
Individual health plan is a type of plan that the insurers offer and covers medical costs up to the limit of the base sum insured. It is advisable to have a health insurance plan for every individual of the family. With the growing health care expenses, the need for health plans has shot up.
The world is currently going through a pandemic phase and the deadly virus has made us realize the need for a health insurance plan. The individual health plan is offered to salaried employees.
3. Critical Health Plan:
Critical health plans are the type of insurance plan that one must certainly have in their financial planning. Critical illness insurance covers certain serious illnesses that are expensive for treatment. Most of the health insurance plans do cover critical illness cover, but it is always advisable to have a separate rider as the insurer does not have to feel the burden of exorbitant hospitalization cost.
In a critical health plan, there is no indemnity clause. As in, the entire sum assured is paid to the insurer on diagnosis of the illness.Thus, this plan pays the entire Lumpsum amount on diagnosis. For example, Mr. Kumar has a critical illness insurance plan of Rs. 10 lakhs. Due to an unfortunate incident, he gets hospitalized for heart ailments. As he is diagnosed with critical illness as defined, he will get a lump sum amount for treatment.
4. Monthly Investments:
Regular Monthly Investments is something that most people plan to do but very few people actually end up doing so. People in their late 20’ somethings are very focused about Monthly Savings but where to invest their hard earned money is a question to be thought of! Investing the savings to beat Inflation and properly plan for the future is something that isn’t very predominant yet. And hence, the Investment Ratio in India is yet so low with such exposure in Cash Transactions.
However, in today’s scenario, with different investment alternatives, people are being aware about the benefits of investment. One of the alternatives being investment in ULIP plans that offers insurance cover along with market investments.
5. Tax Planning:
The most interesting aspect about the youth of India is that they do not plan rightfully for their tax. Tax planning is one of the most important financial resolutions that an individual should have in their bucket list. Due to lack of awareness, people end up paying the entire taxable amount from their hard earned salaries. To avail tax exemption, there are so many financial investment alternatives in the market that one can choose.
For example, the real understanding of Wealth Tax, Property Tax, Gift Tax, etc. as well as Tax Rebates possible under section 37B, 80D, etc. are very useful and effective tips for proper and sound Financial Planning. This is most helpful for people who are either small or medium scale entrepreneurs or have multiple properties and get rent income.
6. Retirement Planning:
Retirement Planning is a neglected topic among the youths of India due to lack of knowledge and knowing its importance. With the rise in standard of living and miscellaneous expenses, people are not even aware of the cost that is required at a retirement age. It is always advisable to start saving at an early age to plan properly for your retirement age. As they say, small savings leads to a larger pool of money, similarly investing in retirement planning will secure your old age expenses irrespective of the inflation in the market. Early age savings and investment holds the power of compounding and rupee cost averaging. Having a proper financial planning will lead you to better financial goals.
7. Child Education:
Another important financial resolution for parents is planning for their child's education. Child Education Plan is something that every parent would want for their child and would never compromise. However, the same needs to be very categorically planned as educational inflation is much higher than the regular inflation. The school and college fees have more than tripled in the last 2 decades and are expected to rise post covid pandemic situation. Having planning for children's education in your financial resolution this year will ease the expense burden of their child’s education.
8. Parent’s Health Plan:
As we grow we usually tend to neglect the health of our parents and overlook their healthcare expenses.Many people regret this behavior when they have to pay huge bills if their parents get hospitalized and don't have health insurance. It is always advisable to have a health insurance plan for your parents as early as possible if they don't have one. Reason being that many insurers don’t provide coverage due to pre-existing illness Heart Attack or any Ailment, Prolonged Diabetes, Stroke, etc and also the risk being on the part of the insurers.
Hence, if any of the parents can get any Senior Citizen Health Plan even with high premium or some exclusion, the same is still worth it because that saves some amount of pinch amidst the hospitalization worries.Also the health insurance premium can be claimed for Tax Rebate under section 80D for any additional Rs 20,000 for Senior Citizen parents!
9. Protection against Loan:
Well, like in the US, even India has become proactive towards assets under loans even if that is for a minuscule degree and especially for home loans. In fact, even personal loans and car loans have become quite predominant but not to the extent of the home loans as there is tax exemption on the same as well over and above the 80C limit. However, if there is not enough coverage for the loan or your life, then that is an area of concern!
Coming to the end of the list, if you have all these 9 financial aspects in your new year resolution then you will ease your finances. You can visit MyInsuranceClub and get more information regarding each of these plans from our certified industry experts.